Auto Equity Loans: Definitions and Examples
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Auto Equity Loans Meaning
How Do Auto Equity Loans Work?
How Can You Get an Auto Equity Loan?
1. Making Sure You Have Equity In the Car
2. Finding a Lender
3. Applying for the Loan
4. Paying off Your Loan
Can You Get an Auto Equity Loan Frequently?
Auto Title Loan vs Auto Equity Loans: Similarities & Differences
Auto Equity Loans vs Refinancing a Car Loan
Pros of Auto Equity Loans
Quick access to cash. The application process and time to funding is often much faster than it is with other types of loans. In fact, once approved, you may get the money deposited into your account on the same day. Less costly than some other funding options. Auto equity loans usually have lower rates than unsecured loans (like credit cards or unsecured personal loans). This is because your car serves as collateral, which lowers risk to the lender. Flexible repayment options. You can often choose between a short- or long-term auto equity loan. Relatively easy to qualify for. Because your car serves as collateral, lowering risk to the lender, qualification requirements for these loans are often lower than they are for other loans. If you are the only owner of your car and have a positive equity position, you have a strong chance of qualifying for an auto equity loan.
Cons of Auto Equity Loans
You could potentially lose your car. These loans use your car as collateral. So, should you default on your payments, the lender is allowed to seize it. You may end up working with multiple lenders. Your current lender may not offer auto equity loans, which means you would need to search elsewhere and keep track of a more complicated loan situation. You will likely need full-coverage insurance on your car. Auto equity loan lenders typically require proof of full-coverage car insurance, not just the state-required minimum liability insurance, on your car. This could add an extra cost to your monthly insurance. Can be hard to find. Auto equity loans are not very common, so you may have to do some digging to find one.
Auto Equity Loan Alternatives
Auto Title Loans
Refinancing a Car Loan
3 Auto Loan Refinance Tips
Refinancing your auto loan could lead to lower monthly car payments and more money in your budget. Lantern by SoFi can help you find the right car refi loan for you. Shortening the term of your auto loan may increase your monthly payments, but you’ll likely pay less in interest over the life of the loan. You may have trouble refinancing the loan on a car that is worth less than what you owe. For more info, check out When Is the Right Time to Refinance a Car?
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